Prudential’s next chief executive could be forced to start the role from outside Hong Kong because of the “friction” of Covid restrictions in the territory, according to the insurer’s newly-appointed interim boss.
Mark FitzPatrick, who will lead Prudential on an interim basis from the end of March, told the Financial Times he could “absolutely see the CEO being based short term outside of Hong Kong until it’s easier to actually be able to run a regional business [from there]”.
The insurer said this month that its next chief executive would be based in Asia following a carve-up of the group that has left it with a UK domicile and joint London-Hong Kong headquarters, but its core market now in Hong Kong and mainland China.
Fitzpatrick, who has ruled himself out of the running for the permanent job, said he “would expect the [next] CEO to be based in Hong Kong in the long term ”but added that a two-week hotel quarantine created an“ element of friction ”.
“There may be practical reasons, in terms of where the individual needs to be based on an interim basis. . . while a new CEO gets to grips with the organization, ”he said.
The territory’s “zero-Covid” policy has disrupted business in Hong Kong, with Standard Chartered’s chief executive Bill Winters saying it will struggle to retain its position as Asia’s top financial center the longer it remains effectively closed to international travel and enforces lengthy quarantines.
A string of global business groups have taken action to temporarily base their top Asia executives outside Hong Kong owing to operational problems caused by the territory’s pandemic restrictions, which are among the toughest in the world.
Luxury hotel group Mandarin Oriental and French spirits maker Pernod Ricard are relocating their executives to alternative hubs including Singapore and Dubai. Meanwhile, Bank of America is reviewing what roles to relocate from Hong Kong to Singapore.
Hong Kong is struggling to contain its worst outbreak of the virus in over two years. Chinese president Xi Jinping has told the city’s leaders to “take all necessary steps” to control the surge in cases, prompting fears of more draconian measures for the financial hub.
Financial services groups warned late last year that the punishing quarantine for anyone entering the territory – as well as long quarantines in government camps for anyone who is a close contact of a person with coronavirus – would damage the city’s standing as a global financial hub.
Prudential has previously come under pressure from activist investor Third Point to eliminate its London head office, whose staff has fallen to a little under 200 in number.
FitzPatrick said he expects that number to fall a “little bit further” over the next year as it aims for a model of “effectively one head office in two locations”, with equivalent capabilities serving London and Hong Kong investors.
Before the pandemic, Prudential’s board met in “different locations”, FitzPatrick said. “We’d expect that board meetings would be held through a mixture of. . . London and in Asia on a go-forward basis, as people can travel more. ”
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